Barclays, Fortune Brands, Commonwealth Bank among day's sellers; Fortune, Republic trade well

By Andrea Heisinger and Paul Deckelman

New York, Nov. 18 - Barclays Bank plc, Fortune Brands, Inc., Republic Services, Inc., Public Service Electric & Gas Co., HRPT Properties Trust, Commonwealth Bank of Australia and Transatlantic Holdings, Inc. were the latest crop of deals to get done on a busy Wednesday in the high-grade bond market.

The two largest sales came from foreign banks. Barclays sold $2 billion of notes due in 2013 in a fairly quick deal. Commonwealth Bank of Australia priced $1.25 billion in five-year government-guaranteed bonds later in the day.

Among the smaller deals was $250 million in 30-year bonds from Public Service Electric & Gas. Transatlantic Holdings sold a slightly larger $350 million of 30-year bonds.

Consumer products company Fortune Brands priced $400 million of senior notes due in 2012.

The deal from Republic Services was upsized to $600 million from $450 million in 12-year senior notes.

There were a handful of deals that were announced, but had not priced at press time.

CDP Financial Inc. is planning a three-tranche sale of notes with five, 10-and 30-year maturities. Oaktree Capital Management, LP announced a $250 million deal of 10-year notes. Pricing for both CDP and Oaktree is expected on Thursday.

Delta Air Lines Inc. announced its plans to sell class A and B pass through certificates. The class B tranche is split-rated.

Volume is expected to decrease slightly on Thursday, but has a fair amount of sales already with those held over from Wednesday.

Among the established issues in the secondary arena on Wednesday, a market source said the CDX Series

13 North American high-grade index held steady at a mid bid-asked spread level of 100 bps, after having widened by 1 bp on Tuesday.

Advancing issues continued to lead decliners, by around a 10-to-9 ratio.

Overall market activity, reflected in dollar-volume totals, rose by 17% from Tuesday's pace.

Spreads in general were seen a little tighter, in line with modest rise in Treasury yields; for instance, the yield on the benchmark 10-year notes pushed upward by 4 bps Wednesday to 3.36%

New-deal activity continued to dominate the investment-grade secondary on Wednesday, with the just-priced offerings from, among others, Fortune Brands, Republic Services and Public Service Electric & Gas all seen having tightened by several bps from the respective spreads versus comparable Treasuries at which those deals had priced earlier in the session.

"There have been an awful lot of new issues this week," a trader said with no small degree of understatement. "It's just been continuous.

"Overall market volume was decent, and it was new-deal dominated."

Commonwealth Bank prices $1.25 billion

Commonwealth Bank of Australia priced $1.25 billion of 2.7% five-year notes late in the afternoon at Treasuries plus 52.8 bps. They were talked at 25 bps over mid-swaps, a source said.

The sale was originally announced with both a fixed and floating-rate tranche, but the floaters disappeared, a source away from the deal said.

"They usually do both, but they just came out with the fixed," he said. "I don't know what happened there."

They were sold via Rule 144A and are guaranteed by the Australian government.

Citigroup Global Markets, Commonwealth Bank of Australia and Morgan Stanley ran the books.

The financial services company is based in Sydney, Australia.

Barclays sells $2 billion bank notes

Barclays Bank priced $2 billion of 2.5% three-year bank notes at 128 bps over Treasuries, with Barclays Capital as bookrunner, a source away from the sale said.

The financial services company is based in London.

Republic Services upsizes 12-years

Republic Services priced $450 million of 5.25% 12-year senior unsecured notes at Treasuries plus 190 bps, a market source said. They were sold under Rule 144A.

The size was increased from $600 million, the source said.

Bank of America Merrill Lynch and RBS Securities ran the books.

Proceeds will be used to finance the call of 7.875% notes due in 2013 and finance a portion of the call of 4.25% senior subordinated convertibles due in 2034.

The waste management and garbage collection company is based in Phoenix, Arizona.

Transatlantic prices 30-year late

Transatlantic Holdings priced $350 million of 8% 30-year senior unsecured notes to yield 8.25%, a source close to the sale said. They have a spread of 394.1 bps over Treasuries.

They priced in line with guidance in the 8.25% area, the source said, and were launched at 8.25%. The sale was nearly two times oversubscribed.

Goldman Sachs & Co. and Wells Fargo Securities were bookrunners.

Proceeds will go for general corporate purposes, including the repurchase of common stock and 5.75% senior notes due 2015.

The issuer provides property and casualty reinsurance through subsidiaries and is based in New York City.

Neutral day brings issuance

New deals continued coming into the new issue market, with a slight decrease expected in the remainder of the week.

"I think it may die down a little [Thursday]," a source said.

Another source said the day was "neutral," and didn't have much excitement other than "a bunch of new deals."

The source noted that two sales that a three tranche sale expected from CDP Financial did not price, and wondered why. He also questioned why the Commonwealth Bank of Australia deal was reduced to a single tranche instead of including some floating-rate notes.

"I don't know what's going on today," he said at the end of the day.

A sale from Oaktree Capital Management also did not price, and is expected to be Thursday's business.

Volume may finally be easing up several days of non-stop deals.

"I think it might actually slow down a little," the source said.

Fortune Brands sells short bond

Consumer products company Fortune Brands sold $400 million of 3% three-year senior unsecured notes early in the afternoon at Treasuries plus 230 bps, an informed source said.

Barclays Capital and J.P. Morgan Securities ran the books.

Proceeds will be used by the issuer - based in Deerfield, Ill. - to repay a term loan.

Public Service sells quickly

Newark, N.J.-based energy company Public Service Electric & Gas sold $250 million of 5.375% 30-year senior medium-term notes at Treasuries plus 112 bps, according to a market source and FWP filing with the SEC.

Bookrunners were Scotia Capital and Wells Fargo Securities.

The proceeds will be added to the company's general fund and used to finance a portion of its current construction fund. They will also be used to reimburse the treasury for funds expended, including for the repayment of short-term debt.

HRPT upsizes 10-years

HRPT Properties Trust sold an upsized $125 million of 7.5% 10-year senior notes at par of $20, after the sale went overnight from Tuesday.

The size was initially $100 million.

Bookrunners were Bank of America Merrill Lynch, Morgan Stanley and Wells Fargo Securities.

Proceeds will be used to reduce amounts under a revolving credit facility.

The real estate investment trust is based in Newton, Mass.

CDP plans three-tranche deal

CDP Financial is planning a sale of notes in three tranches, market sources said.

The offering consists of five, 10 and 30-year tranches, and is expected to price on Thursday.

Bank of America Merrill Lynch and Goldman Sachs & Co. are running the books.

The subsidiary of public pension plan provider Caisse de dépôt et placement du Québec develops public financing programs and is based in Montreal.

Oaktree to price $250 million

Oaktree Capital Management announced a $250 million of 10-year notes, with pricing of the Rule 144A offering expected Thursday, a source close to the sale said.

Bank of America Merrill Lynch is running the books.

The global investment management company is based in Los Angeles.

Delta plans pass-through sale

Atlanta-based commercial airline Delta announced its plans to sell $688.74 million of class A and B pass-through certificates, according to an S-3 filing with the SEC.

The deal will consist of $568.796 million of class A certificates that will be priced at par. They have an initial distribution date of Dec. 17, 2019, and a final distribution of June 17, 2021.

The $119.944 million of split-rated class B certificates (Ba2/BBB-) will also be priced at par. They have an initial distribution of Dec. 17, 2016, and final date of June 17, 2018.

Goldman Sachs & Co. and Morgan Stanley are bookrunners.

The proceeds will be used to purchase equipment notes for new aircraft.

New industrial deals seen trading tighter

When Fortune Brands' $400 million offering of 3% notes due 2012 were freed for secondary dealings, a trader saw the issue trading at 228 bps bid, 222 bps offered. That compares with the 230 bps over level at which the deal had priced earlier in the session.

Another trader saw the Fortune bonds offered as tight as 220 bps, and saw the paper going out at 225 bps bid, 222 bps offered.

That trader also saw Republic Services' paper at 186 bps bid, 183 bps offered - tighter than the 190 bps level at which the $600 million deal, upsized from $450 million, had come to market earlier in the session.

Another trader also saw the waste hauler's bonds at that same level.

PSE&G's new 5.375% secured medium-term notes due 2039 were being quoted at 108 bps bid, 107 bps offered, versus the 112 bps over spread at which the $250 million offering had priced.

Boeing bounces around

A trader saw Boeing Co.'s new two-part offering, which priced on Tuesday, "kind of bouncing around" in Wednesday's trading.

The aerospace giant's $700 million of 1.875% notes due 2012 were seen offered at 69 bps over, versus their spread at pricing of 80 bps. They had been offered at 72 bps earlier in the day.

However, the trader said that "surprisingly," given its "pretty good deal size," its $500 million of 3.75% notes due 2016 were not much seen. There was one quote, around 109, versus the 115 bps level at which the deal had priced.

New financials tighten up

Among the new financial names, a trader said that Barclays Bank's $2 billion of 2.50% notes due 2013 had firmed smartly to a "pretty tight" bid level of 120 bps over and an offered level of 119 bps - versus the 128 bps over spread at which the mega-deal had priced.

Looking at some of the Tuesday financial deals, US Bancorp's 2.875% MTNs due 2014 were heard offered at 76 bps, versus the 80 bps at which the $500 million deal had priced during that session.

And another Tuesday deal, Morgan Stanley & Co.'s $2 billion offering of 4.20% notes due 2014, which had priced at 205 bps, had come in to 197 bps on Wednesday.

Existing financials seen slightly wider

While the new financial credits were being quoted tighter versus their pricing levels existing financial credits were seen unchanged to several bps wider versus Tuesday's levels.

For instance, Citigroup Inc.'s 6.375% notes due 2014 were unchanged, at 285 bps over, a market source said, while the New York banking giant's 5.5% notes due 2014 widened by 2 bps, to 279 bps over, while its 8.50% notes due 2019 were seen 3 bps wider at 302 bps.

Goldman Sachs Group Inc.'s 6.15% notes due 2018 and 7.5% notes due 2019 were each seen about 4bps wider on the day, at 160 bps and 165 bps over, respectively.

J.P. Morgan Chase & Co.'s 2.125% notes due 2012 widened by 7 bps on the day, to 31 bps over.

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